Saturday, November 09, 2013

The technological resource curse

The short version of the resource curse is that some countries are afflicted with the paradoxical curse that there is a valuable resource that makes up most of the wealth of the nation. Unfortunately, very few people are needed to produce/extract the resource, and so for the rest of the population the only determinant of wealth is the ability to take part in wealth distibution - no amount of conventional effort gives them a part of the money cake. This puts enormous social pressure on the strength of the institutions that might facilitate this redistribution, and the country risks descending into a more-or-less brutal form of civil war in which corruption destroys the stability of society. Often, the resource-controlling upper class squeezes the middle class, whom they don’t need, down into a huge lower class.

The prototypical resource is oil, and the prototypical country destroyed by the curse is Nigeria. The generalized form of the resource curse is the fear that the West is falling prey to a similar curse: The two resources that threaten to bring the resource curse to the West are said to be technology and capital, but I'm not convinced that capital is a resource in this sense. Highly ownership-concentrated capital seems to me to be like a symptom of a resource-cursed society failing to perform wealth distribution needed, more than a resource in its own right.

That leaves technology. There’s no doubt that a few people can create a huge amount of technology, especially software, which can be reproduced easily. Those who build and control technology are in some ways analogous to those that control oil fields. Here I think the best way to counteract the technology resource curse must be weakening of IP (intellectual property) rights in general and promotion of open source in particular. To take an example from my own employer, Google, for whom I do not in any way speak, we built a browser and open sourced the vast majority of it, meaning that anyone can see the code we wrote that is behind Chrome, and anyone can build their own projects based on parts of or variations on that code (subject to a few simple restrictions). In my case I worked on V8 the high performance JavaScript engine in Chrome. There was nothing forcing Google to open source V8 and Chrome, and I think Chrome could have been as successful as a closed source project like Microsoft’s Internet Explorer. Perhaps even more successful, since some of the technology advances in competing projects have been facilitated by looking at the open source software in Chrome.

The open sourcing of V8 enabled the node.js project, which is the use of V8 to build interactive web sites, rather than the use in a web browser that was originally envisaged. Node.js has an associated community/industry building web sites and cloud services. Some of the big players can be seen on the speaker list at http://nodesummit.com/ but there are also many smaller projects and companies that use the technology. People have used V8 to create value and this serves to redistribute the wealth in some way. The many projects built on the Linux kernel have of course had a much bigger effect - this includes almost every non-Apple, non-Microsoft device in your house, from the TV to the intelligent electricity meter. It is clear to me that open source technologies allow a larger number of people to build useful, profitable, wealth-creating things, by building incremental customizations on top of existing software infrastructure, and they can do it at many scales, right down to the small workshops using tiny Linux computers to control one-off or small series devices. Without open source technologies they could not do these sorts of projects without paying a large company like Microsoft, resulting in a further concentration of wealth like the one the elite controlling an oil nation enjoys. In some cases it would result in the projects not taking place at all, if the producers of the necessary base technology did not see fit to sell a license (eg. because the project is too small to merit their attention, or in a country where they do not have a sales organization).

Patents, especially software patents, work the opposite way from open source and are an entirely voluntary worsening of the technological resource curse that we as a society enforce on behalf of the technology-resource elite. In patent law, if someone establishes a claim to an invention, then it is theirs to monopolize, and they can prevent others from using it even if the other users reinvented it ten years later without ever having heard of it - no copying needs to be proved. Often the patents are very broad and cover remarkably non-innovative ideas putting a dampener on a whole field or industry.

As an example of the effect patents have, Android smart phones are built almost entirely of open source software, and a huge chunk of that is produced by Google (a big chunk of the rest is Linux, again). As far as I know Google gets no money per Android phone. Yet every time someone in the third world gets access to the Internet for the first time using an Android phone, the purchase price of that phone includes a sum that goes directly to Microsoft. By some estimates it is around $10. This despite the fact that an Android phone contains no software from Microsoft, a fact that is not disputed by Microsoft at all. What happens is that Microsoft uses patent law and the courts to coerce the manufacturers into paying an undisclosed sum per phone for the right to continue to build phones. Often these patents are of dubious validity, yet that doesn’t stop the scheme working, given the costs and risks of litigation.

Large companies, like Microsoft are not the only ones looking to profit from popular technologies that they did not develop. There is also a horde of patent trolls, often smaller companies who don’t build any technology at all, but are armed with some patents that they use to attempt to extort money from those that do, actually, build things. If Microsoft is analogous to the elites controlling oil states, then the patent trolls can be compared with the local war lords who use blackmail, sabotage and small scale civil wars to siphon off some of the oil profits in a region.

(My example points at Android because it is a well known technology with vigorous defenders, not least Google, but of course I can’t point at projects that didn’t take place because of the stifling nature of patent law.)

People sometimes defend the patent system on the grounds that it speeds up innovation by rewarding and thus enabling heavy investments. This may be true of some industries, but it does not appear to be the case in the software world. The real innovation that I see in the industry does not seem to be coming from the same places as the patents, quite the contrary. And even if it were true at some marginal level, my contention is that overreaching legal creation of artificial IP monopolies is unhealthy for society as a whole.

Another argument for patents in particular and IP in general is the feeling that they are fair, in a sense. Even the name, intellectual property, invokes an analogy to conventional property that appeals to our naïve sense of fairness. You wouldn’t want anyone stealing your apples or your car, why should they be allowed to ‘steal’ your IP? The analogy is flawed in many ways that are obscured by the equivalence glibly implied by the phrase “intellectual property”, starting with the simple fact, that if someone steals your apple or your house, you are then apple-less and homeless. Yet when someone performs an intellectual feat you performed ten years ago you still have the fruits of your intellectual feat.

Rather than seeing patents as some sort of natural right, we should see them for what they are: an artificial monopoly granted by the state, and with some effects that are pushing in entirely the wrong direction in terms of how we want our society to work. In addition I think it is right for society to encourage open source software as much as possible - I think it has a democratizing effect on control of the means of post-industrial production and a stabilizing effect on society.